FX.co ★ Analysis and trading tips for GBP/USD on February 2

Analysis of transactions and tips for trading GBP/USD

Pound tested 1.2329 when the MACD line was already far from zero, so the upside potential was limited. Sometime later, another test took place, but this time the MACD line was near zero, which was a pretty good reason to buy. This led to a price increase of around 20 pips. No other signals appeared for the rest of the day.

Although the UK manufacturing activity index did not impress market players, GBP/USD rose as the 0.25% rate hike by the Fed revamped risk appetite.

Today, the Bank of England is expected to meet and raise rates by 0.5% at once, which will support buyers' confidence in a new upward trend. As for the upcoming US data on jobless claims, manufacturing orders and labor costs, they are unlikely to have a significant impact on the market.

For long positions:

Buy pound when the quote reaches 1.2396 (green line on the chart) and take profit at the price of 1.2434 (thicker green line on the chart). Growth will be possible only after the meeting of the Bank of England. However, make sure that when buying, the MACD line is above zero or is starting to rise from it. Pound can be bought at 1.2364, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2396 and 1.2434.

For short positions:

Sell pound when the quote reaches 1.2364 (red line on the chart) and take profit at the price of 1.2329. Pressure will return if the Bank of England becomes dovish on future rates. However, when selling, make sure that the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.2396, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2364 and 1.2329.

What's on the chart:

The thin green line is the key level at which you can place long positions in the GBP/USD pair.

The thick green line is the target price, since the quote is unlikely to move above this level.

The thin red line is the level at which you can place short positions in the GBP/USD pair.

The thick red line is the target price, since the quote is unlikely to move below this level.

MACD line - when entering the market, it is important to be guided by the overbought and oversold zones.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.